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China to appeal WTO rare earth ruling: Govt

China's President Xi Jinping.

Apr 17, 2014

BEIJING - China will appeal a ruling by the World Trade Organisation (WTO) that its export restrictions on rare earths and other resources broke international rules, the commerce ministry said on Thursday.

The WTO's disputes settlement body decided last month that China's export duties and quotas, plus limits on who could trade in the rare earths tungsten and molybdenum - which are key raw materials for hi-tech goods - skewed global commerce against other nations.

The panel of independent trade and legal experts backed a complaint lodged in 2012 with the WTO by the United States, the European Union and Japan.

"China will go all out to make an appeal," commerce ministry spokesman Shen Danyang told reporters.

"No matter what the result of the appeal is, China's policy goal of protecting resources and the environment will not change." The government will "continue to strengthen management" of its resources in accordance with WTO rules and "protect fair competition", he added.

China accounts for 95 per cent of global production of rare earths, a term covering 18 metals which are vital for many industrial and hi-tech processes such as the production of smartphones, hybrid car batteries, wind turbines, steel and low-energy light bulbs.

But given that it is home to 23 per cent of global reserves of such metals, China has raised concerns about over-exploitation.

It insists that its measures, imposed in 2011, are aimed at conserving natural resources and reducing pollution caused by mining.

The plaintiffs countered that China sought to drive up export prices and gain market advantage for domestic producers with cheaper access to the raw materials.

"The extracting country cannot limit the sales of its raw materials to its domestic industry, giving them a competitive edge over foreign firms," the WTO ruling said.